China’s e-commerce giant Alibaba ran its first global course in Singapore earlier this year. A highly anticipated event on the retail calendar, more than 2,000 participants took part to arm themselves with the knowhow to maximise their online sales.
And it makes sense. By 2022, e-commerce sales in Singapore are expected to grow by almost 10%. To put that into context, that is 3.5 times faster than overall retail sales. Whilst Singapore favorites like FairPrice and Redmart are contributing to that growth with more than two million monthly visits combined, the dominant players are undoubtedly the marketplaces - Qoo10 and Lazada.
Qoo10 emerged from a partnership between eBay and South Korean ecommerce platform Gmarket, rebranding as Qoo10 in 2015 whilst Lazada has been the beneficiary of more than US$4 billion of investment by Alibaba . Together, they accounted for over 21 million visits in Singapore during February 2018 alone. Beyond Singapore, both firms have established strong footprints across Asia. Their investments brought about significant improvements in distribution and warehousing along with better technology which further improved the customer experience.
The appeal of marketplaces
What makes these marketplaces so appealing is that they effectively offer “shop-in-shops”. It allows brands of all shapes and sizes to sell their goods to a wide demographic of customers, both in Singapore and overseas. This is a critical game-changer as brands no longer need to invest time, efforts and money to develop their own e-commerce platforms as they have done in the past.
So how should retailers approach marketplace selling to take advantage of the growth opportunity of e-commerce in Singapore, and more broadly across Southeast Asia? Specifically, what pitfalls should they avoid?
Setting up a successful shop-in-shop requires several different skills operating at once. Skills that are rarely held by one individual. In creating stores in Singapore on Lazada, we’ve created an approach that has become our model elsewhere in Asia and Europe.
The key figure is the store manager. Primarily responsible for tracking competitor pricing and positioning to ensure the brand’s “shop-in-shop” has the right mix of stock and pricing, they also orchestrate the rest of the team. Like the planner, who is focused on determining which products should lead; how to promote them on the site and who to target. The planner also helps set and measure operating performance to optimize future marketing approaches. In addition to these, the copywriter and design team are responsible for building marketing assets and designing content for the digital shelves so the site looks appealing. The final team member comes from the media, with a clear remit of driving traffic to the site. Which leads to the second learning…
It is easy to assume that because marketplaces do their own advertising, that simply being on the shelf (i.e. the site) is enough. In reality, repeated evidence has shown the importance of supporting the store with targeted media spend, both in search and across display. Without it, direct traffic to the site quickly dries-up. Brands in Singapore see far more success when they build robust media strategies and tracking to target different points along the decision-making journey. In one example, we found display media to be less effective. New customers required more information and were more influenced by social platforms than straightforward banner ads.
Again, it’s easy to assume that mirroring the marketplace’s own promotional calendar including Christmas and CNY sales will be sufficient. It’s important to understand how suited your brand is to different types of promotions, and promotional periods. Counterintuitively, we have found that Great Singapore Sale promotions often do NOT lift sales in Singapore whereas starting a week before Single’s Day – a 24-hour sale on 11 November that originated in China– did increase sales. Ultimately, it falls to the store manager to stay on top of these different opportunities to ensure the brand is maximising its potential for the optimum advertising and promotion investment.
At its core, everything in e-commerce can be tagged, tracked and measured. Both successes and failures can be isolated, understood and either replicated or remedied. In many ways, it is this creation and interpretation of data that is most exciting. It provides the perfect opportunity to test and learn and to discover which promotions, product bundles or messages most effectively drive traffic to the site and sales in the shop-in-shop. For instance, when it comes to bundle promotions, Singaporeans prefer deals for a single product bundle rather than bundles that encourage trial of multiple products from one FMCG brand.
There’s little doubt e-commerce will continue to grow in Singapore and across Asia. Or that it will become an increasingly critical part of overall retail sales. As such, it’s a great moment for brands to seize the opportunity and create a presence for themselves. A shop-in-shop, within the likes of Lazada and Qoo10 is an effective way of doing so.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Jason Hill is Ogilvy's Chief Strategy Officer in Singapore, a role that sees him leading the office's strategy group across a range of capabilities spanning brand planning, customer engagement, channel, data analytics and social strategy.
In his previous role as Ogilvy's Head of Consulting & Data Analytics in Singapore, he led teams of strategy and data specialists to combine customer insights and data analytics with creative interpretation to develop strategic solutions for some of the agency’s largest local and international clients.
With over two decades of strategic marketing experience, Hill brings substantial expertise in areas such as Customer Relationship Management (CRM), Value Proposition Development, Strategic Business Planning, and Data-led Communications Strategies.